Tax residence of legal entities

Previous rules on tax residence of legal entities

Art. 73 of the TUIR stated that companies were considered to be tax resident in Italy if, for the greater part of the fiscal year, alternatively:

• their legal seat was located in Italy;
• they were administered in Italy;
• the main object of their activities was located in Italy.

The same set of rules just described in connection with companies applied with respect to trusts, even if art. 73 provides for certain specific presumptions aimed at attracting the residence of foreign trusts set-up in black-listed jurisdictions where certain conditions are met.
Finally, CIVs were considered to be resident in Italy if they were set-up therein.

Amendments to the previous criteria

The Legislative Decree provides for three alternative criteria that, where met, cause an entity to be considered resident in Italy for tax purposes as of 2024.
These criteria are:

• having their legal seats in Italy;
• having their place of effective management in Italy;
• having the main ordinary management of the entity carried out in Italy.

The place of effective management is to be found where the main and most high-level strategic decisions concerning the company or entity as a whole are taken.
On the other hand, the main ordinary management is defined as the day-to-day management of the entity.
No amendments are provided for with respect to the tax residence of trusts and CIVs.

Main differences between the new and the previous rule

The Legislative Decree, while maintaining the criteria related to the legal seat, modifies the other two criteria. In particular, the main differences between the previous and new rule are summarized below: